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LEGISLATURE OF NEBRASKA
ONE HUNDRED SIXTH LEGISLATURE
SECOND SESSION
LEGISLATIVE BILL 892
Introduced by Hilgers, 21.
Read first time January 09, 2020
Committee: Revenue
1 A BILL FOR AN ACT relating to revenue and taxation; to amend section
2 77-2715.03, Reissue Revised Statutes of Nebraska, and section
3 77-2716, Revised Statutes Supplement, 2019; to change individual
4 income tax brackets as prescribed; to harmonize provisions; and to
5 repeal the original sections.
6 Be it enacted by the people of the State of Nebraska,
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1 Section 1. Section 77-2715.03, Reissue Revised Statutes of Nebraska,
2 is amended to read:
3 77-2715.03 (1) For taxable years beginning or deemed to begin on or
4 after January 1, 2013, and before January 1, 2014, the following brackets
5 and rates are hereby established for the Nebraska individual income tax:
6 Individual Income Tax Brackets and Rates
7 Bracket Single Married, Head of Married, Estates Tax
8 Number Individuals Filing Household Filing and Rate
9 Jointly Separate Trusts
10 1 $0-2,399 $0-4,799 $0-4,499 $0-2,399 $0-499 2.46%
11 2 $2,400- $4,800- $4,500- $2,400- $500-
12 17,499 34,999 27,999 17,499 4,699 3.51%
13 3 $17,500- $35,000- $28,000- $17,500- $4,700-
14 26,999 53,999 39,999 26,999 15,149 5.01%
15 4 $27,000 $54,000 $40,000 $27,000 $15,150
16 and Over and Over and Over and Over and Over 6.84%
17 (2) For taxable years beginning or deemed to begin on or after
18 January 1, 2014, and before January 1, 2021, the following brackets and
19 rates are hereby established for the Nebraska individual income tax:
20 Individual Income Tax Brackets and Rates
21 Bracket Single Married, Head of Married, Estates Tax
22 Number Individuals Filing Household Filing and Rate
23 Jointly Separate Trusts
24 1 $0-2,999 $0-5,999 $0-5,599 $0-2,999 $0-499 2.46%
25 2 $3,000- $6,000- $5,600- $3,000- $500-
26 17,999 35,999 28,799 17,999 4,699 3.51%
27 3 $18,000- $36,000- $28,800- $18,000- $4,700-
28 28,999 57,999 42,999 28,999 15,149 5.01%
29 4 $29,000 $58,000 $43,000 $29,000 $15,150
30 and Over and Over and Over and Over and Over 6.84%
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1 (3) For taxable years beginning or deemed to begin on or after
2 January 1, 2021, the following brackets and rates are hereby established
3 for the Nebraska individual income tax:
4 Individual Income Tax Brackets and Rates
5 Bracket Single Married, Head of Married, Estates Tax
6 Number Individuals Filing Household Filing and Rate
7 Jointly Separate Trusts
8 1 $0-3,289 $0-6,569 $0-6,129 $0-3,289 $0-499 2.46%
9 2 $3,290- $6,570- $6,130- $3,290- $500-
10 19,699 39,409 31,529 19,699 4,699 3.51%
11 3 $19,700- $39,410- $31,530- $19,700- $4,700-
12 49,999 99,999 74,139 49,999 15,149 5.01%
13 4 $50,000 $100,000 $74,140 $50,000 $15,150
14 and Over and Over and Over and Over and Over 6.84%
15 (4)(a) (3)(a) For taxable years beginning or deemed to begin on or
16 after January 1, 2015, and before January 1, 2021, the minimum and
17 maximum dollar amounts for each income tax bracket provided in subsection
18 (2) of this section shall be adjusted for inflation by the percentage
19 determined under subdivision (4)(b) (3)(b) of this section. For taxable
20 years beginning or deemed to begin on or after January 1, 2022, the
21 minimum and maximum dollar amounts for each income tax bracket provided
22 in subsection (3) of this section shall be adjusted for inflation by the
23 percentage determined under subdivision (4)(c) of this section. The rate
24 applicable to any such income tax bracket shall not be changed as part of
25 any adjustment under this subsection. The minimum and maximum dollar
26 amounts for each income tax bracket as adjusted shall be rounded to the
27 nearest ten-dollar amount. If the adjusted amount for any income tax
28 bracket ends in a five, it shall be rounded up to the nearest ten-dollar
29 amount.
30 (b)(i) For taxable years beginning or deemed to begin on or after
31 January 1, 2015, and before January 1, 2018, the Tax Commissioner shall
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1 adjust the income tax brackets by the percentage determined pursuant to
2 the provisions of section 1(f) of the Internal Revenue Code of 1986, as
3 it existed prior to December 22, 2017, except that in section 1(f)(3)(B)
4 of the code the year 2013 shall be substituted for the year 1992. For
5 2015, the Tax Commissioner shall then determine the percent change from
6 the twelve months ending on August 31, 2013, to the twelve months ending
7 on August 31, 2014, and in each subsequent year, from the twelve months
8 ending on August 31, 2013, to the twelve months ending on August 31 of
9 the year preceding the taxable year. The Tax Commissioner shall prescribe
10 new tax rate schedules that apply in lieu of the schedules set forth in
11 subsection (2) of this section.
12 (ii) For taxable years beginning or deemed to begin on or after
13 January 1, 2018, and before January 1, 2021, the Tax Commissioner shall
14 adjust the income tax brackets based on the percentage change in the
15 Consumer Price Index for All Urban Consumers published by the federal
16 Bureau of Labor Statistics from the twelve months ending on August 31,
17 2016, to the twelve months ending on August 31 of the year preceding the
18 taxable year. The Tax Commissioner shall prescribe new tax rate schedules
19 that apply in lieu of the schedules set forth in subsection (2) of this
20 section.
21 (c) For taxable years beginning or deemed to begin on or after
22 January 1, 2022, the Tax Commissioner shall adjust the income tax
23 brackets based on the percentage change in the Consumer Price Index for
24 All Urban Consumers published by the federal Bureau of Labor Statistics
25 from the twelve months ending on August 31, 2020, to the twelve months
26 ending on August 31 of the year preceding the taxable year. The Tax
27 Commissioner shall prescribe new tax rate schedules that apply in lieu of
28 the schedules set forth in subsection (3) of this section.
29 (5) (4) Whenever the tax brackets or tax rates are changed by the
30 Legislature, the Tax Commissioner shall update the tax rate schedules to
31 reflect the new tax brackets or tax rates and shall publish such updated
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1 schedules.
2 (6) (5) The Tax Commissioner shall prepare, from the rate schedules,
3 tax tables which can be used by a majority of the taxpayers to determine
4 their Nebraska tax liability. The design of the tax tables shall be
5 determined by the Tax Commissioner. The size of the tax table brackets
6 may change as the level of income changes. The difference in tax between
7 two tax table brackets shall not exceed fifteen dollars. The Tax
8 Commissioner may build the personal exemption credit and standard
9 deduction amounts into the tax tables.
10 (7) (6) For taxable years beginning or deemed to begin on or after
11 January 1, 2013, the tax rate applied to other federal taxes included in
12 the computation of the Nebraska individual income tax shall be 29.6
13 percent.
14 (8) (7) The Tax Commissioner may require by rule and regulation that
15 all taxpayers shall use the tax tables if their income is less than the
16 maximum income included in the tax tables.
17 Sec. 2. Section 77-2716, Revised Statutes Supplement, 2019, is
18 amended to read:
19 77-2716 (1) The following adjustments to federal adjusted gross
20 income or, for corporations and fiduciaries, federal taxable income shall
21 be made for interest or dividends received:
22 (a)(i) There shall be subtracted interest or dividends received by
23 the owner of obligations of the United States and its territories and
24 possessions or of any authority, commission, or instrumentality of the
25 United States to the extent includable in gross income for federal income
26 tax purposes but exempt from state income taxes under the laws of the
27 United States; and
28 (ii) There shall be subtracted interest received by the owner of
29 obligations of the State of Nebraska or its political subdivisions or
30 authorities which are Build America Bonds to the extent includable in
31 gross income for federal income tax purposes;
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1 (b) There shall be subtracted that portion of the total dividends
2 and other income received from a regulated investment company which is
3 attributable to obligations described in subdivision (a) of this
4 subsection as reported to the recipient by the regulated investment
5 company;
6 (c) There shall be added interest or dividends received by the owner
7 of obligations of the District of Columbia, other states of the United
8 States, or their political subdivisions, authorities, commissions, or
9 instrumentalities to the extent excluded in the computation of gross
10 income for federal income tax purposes except that such interest or
11 dividends shall not be added if received by a corporation which is a
12 regulated investment company;
13 (d) There shall be added that portion of the total dividends and
14 other income received from a regulated investment company which is
15 attributable to obligations described in subdivision (c) of this
16 subsection and excluded for federal income tax purposes as reported to
17 the recipient by the regulated investment company; and
18 (e)(i) Any amount subtracted under this subsection shall be reduced
19 by any interest on indebtedness incurred to carry the obligations or
20 securities described in this subsection or the investment in the
21 regulated investment company and by any expenses incurred in the
22 production of interest or dividend income described in this subsection to
23 the extent that such expenses, including amortizable bond premiums, are
24 deductible in determining federal taxable income.
25 (ii) Any amount added under this subsection shall be reduced by any
26 expenses incurred in the production of such income to the extent
27 disallowed in the computation of federal taxable income.
28 (2) There shall be allowed a net operating loss derived from or
29 connected with Nebraska sources computed under rules and regulations
30 adopted and promulgated by the Tax Commissioner consistent, to the extent
31 possible under the Nebraska Revenue Act of 1967, with the laws of the
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1 United States. For a resident individual, estate, or trust, the net
2 operating loss computed on the federal income tax return shall be
3 adjusted by the modifications contained in this section. For a
4 nonresident individual, estate, or trust or for a partial-year resident
5 individual, the net operating loss computed on the federal return shall
6 be adjusted by the modifications contained in this section and any
7 carryovers or carrybacks shall be limited to the portion of the loss
8 derived from or connected with Nebraska sources.
9 (3) There shall be subtracted from federal adjusted gross income for
10 all taxable years beginning on or after January 1, 1987, the amount of
11 any state income tax refund to the extent such refund was deducted under
12 the Internal Revenue Code, was not allowed in the computation of the tax
13 due under the Nebraska Revenue Act of 1967, and is included in federal
14 adjusted gross income.
15 (4) Federal adjusted gross income, or, for a fiduciary, federal
16 taxable income shall be modified to exclude the portion of the income or
17 loss received from a small business corporation with an election in
18 effect under subchapter S of the Internal Revenue Code or from a limited
19 liability company organized pursuant to the Nebraska Uniform Limited
20 Liability Company Act that is not derived from or connected with Nebraska
21 sources as determined in section 77-2734.01.
22 (5) There shall be subtracted from federal adjusted gross income or,
23 for corporations and fiduciaries, federal taxable income dividends
24 received or deemed to be received from corporations which are not subject
25 to the Internal Revenue Code.
26 (6) There shall be subtracted from federal taxable income a portion
27 of the income earned by a corporation subject to the Internal Revenue
28 Code of 1986 that is actually taxed by a foreign country or one of its
29 political subdivisions at a rate in excess of the maximum federal tax
30 rate for corporations. The taxpayer may make the computation for each
31 foreign country or for groups of foreign countries. The portion of the
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1 taxes that may be deducted shall be computed in the following manner:
2 (a) The amount of federal taxable income from operations within a
3 foreign taxing jurisdiction shall be reduced by the amount of taxes
4 actually paid to the foreign jurisdiction that are not deductible solely
5 because the foreign tax credit was elected on the federal income tax
6 return;
7 (b) The amount of after-tax income shall be divided by one minus the
8 maximum tax rate for corporations in the Internal Revenue Code; and
9 (c) The result of the calculation in subdivision (b) of this
10 subsection shall be subtracted from the amount of federal taxable income
11 used in subdivision (a) of this subsection. The result of such
12 calculation, if greater than zero, shall be subtracted from federal
13 taxable income.
14 (7) Federal adjusted gross income shall be modified to exclude any
15 amount repaid by the taxpayer for which a reduction in federal tax is
16 allowed under section 1341(a)(5) of the Internal Revenue Code.
17 (8)(a) Federal adjusted gross income or, for corporations and
18 fiduciaries, federal taxable income shall be reduced, to the extent
19 included, by income from interest, earnings, and state contributions
20 received from the Nebraska educational savings plan trust created in
21 sections 85-1801 to 85-1817 and any account established under the
22 achieving a better life experience program as provided in sections
23 77-1401 to 77-1409.
24 (b) Federal adjusted gross income or, for corporations and
25 fiduciaries, federal taxable income shall be reduced by any contributions
26 as a participant in the Nebraska educational savings plan trust or
27 contributions to an account established under the achieving a better life
28 experience program made for the benefit of a beneficiary as provided in
29 sections 77-1401 to 77-1409, to the extent not deducted for